White House threatens to veto repeal of medical device tax

posted at 7:21 pm on June 6, 2012 by Erika Johnsen

It is a truth universally acknowledged that, if you want to discourage a certain behavior, you can put a tax on it. (Note: I am in no way endorsing said policy, just pointing out that when you put a tax on something, you can reliably predict that you’ll get less of it.) So, one would assume that through the oh-so-august auspices of the Patient Protection and Affordable Care Act, which include a forthcoming tax on the medical device industry, President Obama is trying to discourage… uh, medical device innovation? Gee, how nice.

Rep. Erik Paulsen (R-Minnesota) is one of the Congressmen leading the charge in getting rid of this little innovation-discouraging surprise contained within ObamaCare, and he’s got plenty of bipartisan support for the bill up for a vote this week. He and Rep. Jason Altmire (D-Pennsylvania) took to The Hill‘s blog to make their case:

In less than seven months, on January 1, 2013, a new tax on medical device companies (part of the Patient Protection and Affordable Care Act) is set to steamroll American leadership in medical innovation. The 2.3% excise tax will be levied on all types of medical devices, from heart stents and pacemakers to MRIs and ultrasounds. Because the new tax is on revenue, not profit, a small company that is not yet in the black would bear the biggest brunt. This tax will hit medical device companies especially hard in states that are leading the way in medical innovation; states like Pennsylvania, Minnesota, California, New York, and Massachusetts.

After touring many device companies, both large and small, we know that this impending tax may force companies to cut jobs, reduce investment in R&D, move overseas, or even shut down completely. This is the worst possible outcome not only for American jobs and American innovation, but also for the patients who might not have access to a new medical device or a new technology that could save their lives.

The bill has a good chance of making it through the House, but Harry Reid’s office has indicated the Senate will not take up the legislation, and the White House has already issued their veto threat.

White House officials threatened a veto Wednesday of a Republican bill that would repeal a tax on the makers of many medical devices sold in the U.S., in the latest partisan clash over President Barack Obama’s health care overhaul. …

The device industry is getting a potential 30 million additional customers who eventually will gain medical insurance due to the health care overhaul, the White House said in its letter warning of the veto.

“This excise tax is one of several designed so that industries that gain from the coverage expansion will help offset the cost of that expansion,” the White House said.

Industry officials insist they won’t gain extra customers, arguing that elderly people who use many of their products are already insured under Medicare.

For another explanation on why this tax would be so devastating, check out this piece from Forbes today — this tax will not only seriously undermine our ability to compete, but could make health care a lot more expensive for a lot of people, to boot (come on, SCOTUS, do the right thing!).

My colleague Robert Book has written a compelling analysis of Obamacare’s medical-device tax, which concludes that it will destroy about 14,000 and perhaps up to 47,100 jobs. The 2.3 percent excise tax on medical devices is a savage blow to innovation. Note that this tax is on sales, not profits. It cuts into the top line, not the bottom line. If not repealed, this tax will start hitting medical-device makers on January 1, 2013.

Another colleague, Benjamin Zycher, has come at the tax from a different angle: In an analysis that concludes that the tax will lead to a reduction in research and development by about $2 billion every year, Zycher estimates how many patients will suffer early deaths because of the throttling of innovation.

One of my close friends is in the medical device business. He detests what the Gov is doing to his firm. They have two devices that have been awaiting approval forever. Taxing them adds insult to injury. Gee I wonder where the expensive nature of things comes from. R&D, sure, the Feds, absolutely.

Sweet, so Republicans can support this, Democrats can oppose it, then the Supreme Court can toss ObamaCare, while everyone who has anything to do with the Medical Device industry becomes big fans of Republicans.

I can’t wait until the DOJ, the EPA, the treasury, the DOE, General Motors, and ALL the obamao cronies are cleaned out of Washington forever. And that absolute moron Harry Reid is kicked out….. He needs a smack in the nose, that’s what he needs.

If or if not bho veto’s this medical device bill, the 24/7 tv ads from lawyers ‘if this or that happened with this device, call us and you will get $’? This goes for any and all drugs from the lawyers as well? You think any company wants to invest in any new product with hanging over their heads if on single person ‘has issues’ with said product?

I have long ago dumped all medical and drug stocks because of the lawyers cratering the stock on one or two people with ‘issues’.
L

It is a truth universally acknowledged that, if you want to discourage a certain behavior, you can put a tax on it.

This is why for years I have lobbied for a 50% tax on any lawmaker’s, President’s, or Governor’s earnings (total earnings, not just what is made on his/her government job) if said persons vote for, sign into law, or allow any tax increase or the imposition of a new tax on anyone but themselves.

I wonder how many Senate Democrats would vote to override the veto if Dingy Harry would bring the House bill up for a vote then let Ø veto? I guess we’ll never know with an obstructionist Democrat Senate.

I see that the picture on the post has bho in his ‘pouty’ face. If bho doesn’t get his way, well dang bho will stomp, throw a fit, and give you the ‘face’? At least it isn’t the ‘middle finger on the face’!
L

I wouldn’t be surprised to see more bills like this between now and November. The bills hit several birds with one stone. Not only are they bills that should be passed, they illustrate the harm of ObamaCare or other Dem policies, and if any Dems vote for these bills to save their own skin it will isolate Obama more and more from his party.

Obama let Pelosi and Reid do the heavy lifting the first two years. Rahm is no longer there. Obama has to have others do the work. One thing to remember is that Obama is pretty much completely inexperienced about getting major legislature through. He didn’t do it in the U.S. Senate. He didn’t do it in IL. In IL Emil Jones took legislation worked on by other Dems and handed it to Obama to be the name who finished it up to build his “record.”

Obama accomplished little during his first six years as a State Senator, as a backbench member of the minority party:

Republicans controlled the Illinois General Assembly for six years of Obama’s seven-year tenure. Each session, Obama backed legislation that went nowhere; bill after bill died in committee. During those six years, Obama, too, would have had difficulty naming any legislative Â­achievements.

Last time we had to try to drag McCain across the finish line.
This time we have to try to drag Americans.
I seriously never thought there was a chance he could win. I didn’t think we were that stupid. He won and it really spoiled my opinion of my fellow Americans. I’ll never trust them again in the same way.

If Dems/libs/progs have taught me anything, it’s that they will fight and die (metaphorically of course) on any hill, no matter its height or strategic value. They will kick, bite and scratch for as long as they can to keep their agenda moving forward, even down to 1/32 of a Cherokee, er inch, so that their ideological successor(s) won’t have to go as far when they pick up the banner and resume the march towards complete governmental control.

Libs: the way to solve the entitlement problem is to ensure that life expentancies are shorter and quality of life sucks for everyone. How to accomplish that, you ask? Well for starters kill healthcare innovation, then death panels can take care of the people…

If or if not bho veto’s this medical device bill, the 24/7 tv ads from lawyers ‘if this or that happened with this device, call us and you will get $’? This goes for any and all drugs from the lawyers as well? You think any company wants to invest in any new product with hanging over their heads if on single person ‘has issues’ with said product?

I have long ago dumped all medical and drug stocks because of the lawyers cratering the stock on one or two people with ‘issues’.

Agreed! Late night TV is swamped with “1-800-Bad-Drug” ads from Lawyers wanting to cut flesh from Device manufactures. These are men investing to extend and enhance the lives we have. What do Medical Lawyers do?

The Boss Emeritus has also covered this extensively. For the life of me (no pun intended) I cannot understand Obama’s rationale to veto this (except for the old standby motive of “I won”). Whose vote is he going after here exactly? The anti-stent movement?

Why are you so sure Mitt would do anything different? Look at his record in Mass. Mass Care had all kinds of new fees in it. Fees similar to this one on businesses. Health Care has to be paid somehow and Mitt Romney still insist Mass Care is a great program. His new advisor wants these Health Panels nationwide. That is the major part of Obama Care. Mitt supported Obama Care in 2010 when it passed. He still supports it he is just saying things to get elected. Look at who advises him. They want no spending cuts ever (right in the future when has that ever happened?). They will thus have to raise taxes and this is a tax.

Health panels? Do you mean health exchanges? And how do you define “nationwide”? States acting independently, or a “nationwide” federal mandate?

Buy Danish on June 6, 2012 at 9:58 PM

Yes Health Exchanges. Mitt stands for making Health Care equal across the States. To me that means they must all equal what Mitt thinks is the best in this case Mass Care. Besides Mitt wrote in his book that Romney Care should be implemented Nation Wide. He fought for Obama Care in 2010 when it passed. Mitt is peeing on us and telling us it is raining when he says he would repeal Obama Care. Mitt loves it. Mitt invented it with his good friend Teddy Kennedy.

From the quote: “In an analysis that concludes that the tax will lead to a reduction in research and development by about $2 billion every year, Zycher estimates how many patients will suffer early deaths because of the throttling of innovation.”

Which, though no one will admit it, is exactly the point of the tax. Limit patient access to innovative (and probably more expensive) devices, and if some of them die it means fewer people to drag money from Medicare along with the salutary side effect of reducing our greenhouse emissions.

Typical socialist playbook. Infiltrate a legitimate government, screw it up, and stage a revolution to cover your butt for your screw up. When you take power, have poor ol’ Boxer sent to the knackers’, rather than own up to your responsibilities. Just like in Animal Farm, these people are swine.

The device industry is getting a potential 30 million additional customers who eventually will gain medical insurance due to the health care overhaul, the White House said in its letter warning of the veto.

BS. As if anyone who really needs a medical device wouldn’t take the necessary steps to get one.

The tax on medical devices was, for me, the first and most significant clue (although not the only one)that the PPACA was a scam from the beginning.
You cannot “bend the cost curve down” for something if you are actually raising its cost.

And for those who argue that it’s a tax on the suppliers rather the customers (unlike a sales tax, which is paid on top of the purchase price that goes to the producer / retailer) and thus does not raise the cost of the products — yes, I have heard this argued by otherwise rational human beings — all costs are eventually passed on to the consumer, usually through higher prices calculated to generate the revenue to pay the taxes.